A closer look at Spotify Royalties

Spotify made a bold move in 2013 and created the Spotify Artists page. This page breaks down how Spotify does its math and distributes the money into royalties (Time). Spotify came out and released that they pay on average $0.007 per play, but these artists are not paid on a per play bases. The model they use makes it almost impossible to truly judge how much they will pay per play of a certain song. It is more based on the popularity of the album then of the play itself. Spotify released that it has paid around $1 Billion in royalties since the companies launch in 2008. The company decided to release all of this information due to severe back lash from several artists. Thom Yorke of Radiohead being the most popular. He removed many songs from his solo album in protest of how little Spotify pays artists (BBC). Another aspect in this equation that many are forgetting is how the royalty is split once it is paid. It is unclear how much money goes to the record label and how much goes to the singer and song writer. The equation has so many variables that it is difficult to truly measure what each play will exactly make and who that money will go to. It also depends on how many people have subscribed to the site. Recent projections have shown that when the subscriptions increase, so will the money being paid in royalties (BBC). Part of me finds all of the commotion about it a bit silly. People are not buying the song, they are streaming. And with so many free streaming sites, I am just happy to know that one is actually giving money to the artist that deserves it. The artists absolutely deserve what they are owed for their work and our enjoyment of their music, but at what point are artists just getting greedy? Or is the company being greedy and withholding money from the artists? I do not know enough about the companies financials to make either claim but I think it is something to seriously consider.

http://www.bbc.co.uk/news/entertainment-arts-25217353

http://business.time.com/2013/12/03/heres-how-much-money-top-musicians-are-making-on-spotify/

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One thought on “A closer look at Spotify Royalties

  1. When you mention who is being greedy, to me it seems like artists have created a historical benchmark from the profitable time of buying CDs. I mean people are buying less music and the future seems to be streaming – http://thetrichordist.com/2014/01/02/no-streaming-is-not-more-profitable-than-transactional-sales-not-today-maybe-not-ever/

    But there has to be a reason why consumers stopped buying music. I think it’s 1. Convenience/portability of a digital copy and 2. Cheap costs with unlimited listening power. It’s almost as though these industries are battling for our dollar. There are the big record companies, and also streaming sites like spotify. When these big labels demand more money and streaming sites are like the cheap outsourced versions of domestic jobs, we’re going to go with the cheaper option. All in all, I think this is good for the consumer. No longer do I have to wait for MTV to play the music video I want to see and have to endure ads and commercials in the process. I can watch it on youtube and I have adblock, I haven’t seen an ad on youtube in years. The catch is that these artists might not be able to make a living off of these royalties and may abandon music as a profession. But until that mass exodus of musicians, we’re getting the good end of it. Right now tour revenue is a major source of income, just like the times before records! Looking at the financials, for consumers to complain about this is like saying ‘hey guys, take more of my money, please.’

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